Nextel link takes Nascar to new level

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The Nascar Nextel Cup Series.

It doesn't flow off the lips as easily as the phrase Winston Cup Series did. And for some diehard racing fans, it's almost as blasphemous as having to utter the words "New Coke" in the mid-`80s. But Nascar enthusiasts will have to get used to it. Like New Coke, the Nextel Cup will be out to attract young consumers, but unlike the ill-fated soft drink, there's no chance of rescinding this decision that weds wireless and racing.

Nascar in June announced an extraordinary 10-year, $700 million sponsorship deal with Nextel Communications in which the wireless provider would replace R.J. Reynolds Tobacco Co. and its premier brand, Winston, as the sponsor of Nascar's top racing league.

RJR had been the sponsor for 33 years and helped Nascar grow to become, arguably, the most popular sport in the U.S. behind the National Football League. RJR was paying an estimated $30 million to $60 million a year for its Winston Cup sponsorship.

Starting with next year's season, the Nascar schedule will be known as the Nextel Cup. The familiar red and white Nascar/Winston logo is being replaced by a yellow and black version for Nextel.

Nextel's creative agency, Omnicom Group's TBWA/Chiat/Day, New York, is already planning a series of ad campaigns to highlight the sponsorship agreement. Nextel spent $197 million in measured media in 2002, according to TNS Media Intelligence/CMR, and is on target to spend about $210 million this year.

"The expense of Nascar will not even be a blip on our radar screen," Nextel CEO Tim Donahue said at the June announcement.

This is more than just the ending of one relationship and the beginning of another, however. Nascar's deal with Nextel could signal a sea change in area of sports sponsorships.

"No question," says David Carter, president of Sports Business Group, Los Angeles. "You're going to see more cross-marketing platforms in this deal than you've ever seen in any deal between a marketer and a sports property. And if it's successful, and it should be, you're going to see more deals like it."

Started at Super Bowl

The marriage between the good ol' boy racing league and the high-tech communications company actually started at January's Super Bowl in San Diego. Besides being the crowning moment of the football season, the Super Bowl is a handshaking, networking dream for blue-chip companies that send their advertising and marketing chiefs to mix business with pleasure.

In the lobby of a San Diego hotel, Nascar Director of Corporate Marketing Brian Corcoran met up with Nextel Director of Sports and Event Marketing Michael Robichaud. Less than a week after the Super Bowl, it would become public that RJR wanted to end its sponsorship of Nascar's top racing series. In the inner circles of people such as Mr. Robichaud, it was already common knowledge.

Ironically, Mr. Corcoran was attending the Super Bowl as a guest of Coca-Cola Co., just one of several marketers hoping to open talks with Nascar about a sponsorship role. In fact, when Nascar acknowledged that RJR might no longer sponsor the series, it posted a question on its Web site asking fans: "If Winston was to end its association with Nascar, whom would you want to take over as series sponsor?" The choices included automotive, beer, clothing, restaurant and soft-drink companies.

Telecommunications companies weren't even an afterthought.

But after speaking with Mr. Robichaud, Mr. Corcoran was struck with an important thought: "When," he pondered, "was the last time you saw a teenager without a cell phone stuck to his ear?"

And that, in a nutshell, was the key factor for the sponsorship switch-the ability to market the sport to the next generation.

"Technology is an untapped area for our sport," says Bill France Jr., who last month turned over the title of Nascar chairman-CEO to his son, Brian. "Nextel can promote our sport in all forms of media."

The younger France clearly sees the sport changing, but one thing that Nascar never wants to change is fans' fierce loyalty to drivers and sponsors.

purchasing power

A recent survey by Performance Research shows that Nascar fans are three times more likely to purchase a product promoted by their favorite driver than fans of another sport. That devotion means a lot to companies such as Anheuser-Busch's Budweiser, DuPont and United Parcel Service, marketers that pay up to $20 million a season to sponsor a car.

The two primary TV networks that broadcast Nascar races sound thrilled about their involvement. Though News Corp.'s Fox and General Electric Co.'s NBC have yet to see a profit on the five-year, $2.4 billion deal they signed in 2001, executives at both networks say the profits will come and point to the numbers. Nascar's ratings are second only to the NFL, and it was the only sport besides the NFL to show an increase in its audience the last two years.

How successful is it? Nascar announced this year its traditional Labor Day race in Darlington, S.C.-the heart of its Southern roots-was being moved to the California Speedway. "Nascar never would have made such a move in the past," says Steve Rosner, of 16W Marketing, East Rutherford, N.J. "But their fan base has exploded."

And watching the explosion is Nextel.

"The people who watch Nascar and go to Nascar races are vastly different today," says Mr. Robichaud. "Demographics are more affluent, more in tune with technology."